New Housing Supply
Debate between Mark Pawsey and Andy Slaughter
Mark Pawsey (Rugby) (Con)
It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford), whom I know has spoken on housing in this Chamber for many years. It is also a pleasure to speak as a member of the Communities and Local Government Committee, whose report we are debating. I pay tribute to its Chair, the hon. Member for Sheffield South East (Mr Betts), who brought together Members from both sides of the House in the Committee to produce a report that we were all happy to put our names to. He referred earlier to the report’s key finding, which is that there is no “silver bullet” for removing the housing deficit our country faces. The report goes on to state:
“Many of the measures in the Government’s housing strategy will provide a welcome boost in the short to medium term”.
I hope to demonstrate that the pessimism exhibited by the right hon. Member for Greenwich and Woolwich is misplaced.
We know the serious problems we face. Many Members have referred to the need for some 230,000 new homes every year until 2033 just to cope with the increase in household formation. The other factor we must take into account in our deliberations is the state of the economy that the Government inherited. Of course, there will be many areas relating to the financing of new housing where the Government would wish to spend more to achieve more, but we must recognise that at present that is simply not possible. Housing is important not only for providing homes for our people, but for our economy. The previous Housing Minister reminded us that every 100,000 houses built adds 1% to GDP. We certainly need that growth in our economy. The National Housing Federation, which provided a briefing for the debate, tells us that every affordable home built generates an additional £108,000 in the economy and creates 2.3 jobs.
I will speak about each sector in turn: the Government’s initiative in the private sector, the importance of the private rented sector, and changes the Government are making to the social sector. I make no apology for starting with owner-occupation, because fulfilling people’s aspiration to own their own home is a key principle for Conservative Members. As the Prime Minister said in his party conference speech last year,
“We are the party of home ownership.”
Over the past few years home ownership, which currently stands at 65%, has been falling. Lots of statistics abound. My hon. Friend the Member for Meon Valley (George Hollingbery) said that the average age of a first-time buyer is now about 37. It is therefore entirely appropriate that the Government have brought forward schemes to stimulate owner-occupation, of which three are key: NewBuy, First Buy and Funding for Lending. The Select Committee report suggested that the Government should review NewBuy after its first year of operation. When I talk to house builders, I sense that a degree of momentum is building up behind the scheme. Forty builders and six lenders have signed up to it so far, and in November last year the Home Builders Federation estimated that 2,000 reservations had been made.
Statistics show that there were 6,780 sales in the first 13 months of the First Buy scheme. The Government are committed to increasing the funds available to it: the Chancellor announced in last year’s autumn statement that an additional £280 million will be available on top of the £900 million announced in the 2011 Budget. That should help 16,500 first-time buyers.
There has been evidence in the past couple of days that Funding for Lending is not finding its way into industry as fast as we might like, but it is starting to work its way through to mortgages. The Bank of England’s “Credit Conditions Survey”, published on 3 January, found that lenders were intending to increase their mortgage lending significantly in the first few months of 2013 thanks to the funds they can now borrow under Funding for Lending. On 22 January, the BBC ran a news item pointing out that house loans have risen to their highest level in five years—which suggests loans are easier to come by—quoting Halifax’s chief economist, Martin Ellis, as saying that this is due to the scheme. Mr Ellis says that the benefits of the scheme are now feeding through to the mortgage market. He states:
“I suspect Funding for Lending is having an effect…The scheme has only been in place since last summer, but it’s helping to support, and push up, the level of sales.”
In addition to Government schemes, there are local authority schemes. My hon. Friend the Member for Meon Valley referred to schemes in other parts of the country. I might add that my local authority, Rugby borough council, in conjunction with Lloyds bank, has introduced the Lend a Hand scheme, which lets people borrow with a 5% deposit and puts in a fund of £1 million that will enable 40 buyers to buy their first home.
Much of what people know about house building revolves around anecdotal evidence. Over the past couple of weeks I have picked up two bits of anecdotal evidence in my constituency. The first arose from a visit I made to a volume house builder who told me that since Christmas, inquiries and sales on the development he is marketing have been at their highest level for many years. The second is not so positive. A young man came to see me in my surgery. He has finished his apprenticeship and is on a very good salary of £38,000 working for one of Britain’s best companies. He is at an age and in a position where he is ready to buy his first home, but regrettably he has never borrowed. He bought his car and met all his expenditure out of savings. He is unable to get a mortgage because, not having borrowed, he is unable to demonstrate the ability to pay off a loan. He knows what he needs to do—to take out a loan and repay it on time. This has put back by six months to a year that young man’s aspiration to get started on the housing ladder.
In referring to people’s aspiration and desire to own their own home, it is important to talk about the right to buy. Recent statistics show that the reinvigoration of this Government’s scheme has doubled right-to-buy sales from 1,041 between July and September 2012 to 2,010 between October and December 2012. That means that 3,495 council-owned properties have been sold to tenants since the scheme was launched last April, which is a third more than the whole of the previous year and the highest number of sales since 2007. I know that some in this Chamber will think that that is not a good thing, but I think it is because it enables people to get started.
Mr Andy Slaughter (Hammersmith) (Lab)
I doubt whether anybody in this Chamber thinks that the principle of someone being able to buy their own property is a bad thing, but does the hon. Gentleman agree that what is a bad thing is that a third of right-to-buy properties are now owned by private landlords?
Mark Pawsey
The properties have been sold and that provides for a mix of tenure among that housing. I do not see any difficulty with that. It is a perfectly sensible right.
The hon. Gentleman moves us on to the private rented sector. The Committee’s report says that the Government should focus on helping small private landlords to
“expand their portfolios and invest in new build housing.”
The Chairman of the Committee reminded the House that we have just started our inquiry into the private rented sector, and I look forward to a similar debate on that report in the coming months and years.
It is important to note that the private rented sector should no longer be seen as the poor cousin to home ownership. For many people, renting privately has become a preferred choice, because they want the flexibility the sector can provide. In many instances, private renting is becoming a new norm. More than 8 million people in England now rent from a private landlord, an increase of more than 69% over the past 10 years, as the sector has moved from accounting for 9% of housing to 18%. Interestingly, the Chartered Institute of Housing has suggested in its presentations that that figure could rise to 25%. I accept that, in many instances, renters would prefer to be in other tenure—they would prefer to be an owner-occupier or in social rented accommodation—but private renting has its benefits, particularly for those who want flexibility and do not want the responsibility of maintaining the fabric of a building through owner-occupation.
The Committee looked at institutional investment in the private rented sector, and I am pleased that the Government commissioned the Montague report, which shows their commitment to dealing with housing issues. The report’s key recommendation—it was also a key recommendation of the Committee report—was the need to attract institutional investment into the system.
One of the issues we discovered when taking evidence is that institutions are not keen to invest directly in the residential sector because of the amount of management and administration that looking after residential property entails. It is striking that institutions invest in commercial buildings because of the lower management costs involved. They send out a rent demand once a quarter, for example, and are able to pass on repair obligations to occupiers. A tie-up between housing associations and institutional investors might be possible. Housing associations are very good and have demonstrated over many years a strong track record in managing social rented accommodation. I do not see why they cannot offer their services to institutional investors, whereby the investor owns a stock of private rented accommodation and tells the housing association, “You’ve got the skills and the experience to manage it.” That is a business opportunity for the housing association sector, if it wishes to take it up. I would be interested in hearing any thoughts the Minister may have on that issue.
The Select Committee talked about the need to make it easier for landlords to let homes, and about build-to-let developments built specifically for the private rented sector. Sir Adrian’s report highlighted the potential for investment and said the Government should consider providing incentives to encourage the development of build-to-let business models. I am pleased the Government have made a commitment to that sector. A press release from the Minister for Housing launched a £200 million fund to boost the construction of new homes specifically for private rent.
Any remarks on the social housing sector need to have regard to the changes to the Government’s welfare system, which were referred to by the right hon. Member for Greenwich and Woolwich. I will draw attention to some striking figures. There are currently 2 million households in England on housing waiting lists and 250,000 families living in overcrowded accommodation. Under the last Government, local authority housing waiting lists rose from 1 million in April 1997 to 1.8 million in April 2010. However, nearly a third of working-age social tenants on housing benefits are living in accommodation that is too big for their needs. That equates to nearly 1 million spare rooms that are being paid for by the taxpayer, denying many hundreds of thousands of people the chance to house their family adequately. I am sure we all agree that every family deserves the chance to be housed comfortably. Hard-working taxpayers, many of whom face tough choices of their own, will have a view about these properties.
Mr Slaughter
I will leave it to the hon. Gentleman to resolve for himself the moral certainty with which he blames existing social tenants for the housing crisis. What percentage of the people who are subject to the bedroom tax does he think have been offered smaller accommodation? I will give him a clue: in Hammersmith, the figure is 5%.
Mark Pawsey
I accept that that is a concern. Indeed, the issue arose in the Select Committee’s report on the effect of changes to the welfare system that the stock is not available for people to move to. That point clearly needs to be considered.
I had the opportunity to talk about many of the welfare reform issues when I visited sites in my constituency managed by Orbit, a social housing provider. I was taken around by Elaine Johnson. I congratulate Orbit on the high quality of the leaflet it has prepared on the effects of the changes.
It is not possible to talk about the supply and financing of housing without having regard to the planning system. As all speakers have said, we need to create more supply. The changes the Government made to the planning system in the national planning policy framework have been criticised in this debate. However, the presumption in favour of delay has gone and has been replaced by a presumption in favour of sustainable development. The Select Committee’s view on the final version of the NPPF was interesting.
I was pleased to see the planning Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles) in his place earlier, but I am disappointed he is not here now, because I regret that the Government have recently been tinkering with the system after the implementation of the NPPF. That has not been particularly helpful. Changes bring a degree of uncertainty and it is important to allow the new planning system to bed in. Some of the Government’s proposals, such as changing the regulations on converting properties from office to residential use, and changing permitted development rights regarding the size of extensions and, more recently, the right to light, are not helpful. I understand what the Government are trying to do; the aim is clearly a further freeing up of the planning system, but I fear that some of the changes may be counter-productive and will not lead to the growth we need in the sector. In fact, they could lead to more uncertainty in planning.
One recent Government development, however, is most welcome. In the autumn statement the Chancellor announced a new £474 million local infrastructure fund to support investment in key local projects and crucial sites. That is of particular interest in my constituency, and I recently met the Housing Minister, the local authority and developers, to consider a site where the development of a new road will be a key part of building 6,200 new homes. Money from that fund will provide additional housing.
In conclusion, I welcome the report by the Communities and Local Government Committee and it is right to say that the problem of housing will not get sorted overnight. I believe, however, that we are already starting to see the benefits of Government policy through the First Buy and NewBuy schemes, funding for lending, and changes in the right to buy. I commend the Government on the measures they have introduced, which show that they view house building as one of the most important factors in getting our country growing again.